Comparing Unsecured Loans

Lesson Content

• Lesson Plan Template:

  CTE Lesson Plan

• CTE Course Info and Benchmark Notes

  
  

  Program Title (as applicable): N/A

  Course Title: Personal Financial Literacy

  Course Number: 8500120

  Career Cluster: Finance

  CIP Number: 09200104PA

  Course Type: Non-Career Preparatory

  CTE Standard(s) or benchmarks:

  • 09.02 – Compare sources of consumer credit

• Unit Outline

  
  

  This lesson can be used within a unit focused on understanding and comparing the different types of consumer credit. The unit can start with identifying and exploring different types of consumer credit, limited to loans and credit cards, before consolidating and analyzing all information gathered to compare each type of consumer credit to understand which types of credit are most advantageous given a person’s creditworthiness and/or financial needs.

• Career Connection

  
  

  Students will apply the career-ready practices of attending to personal health and financial well-being and communicating clearly, effectively, and within reason, in this lesson plan. By exploring three common secured loans and discussing the characteristics of each, students will be able to differentiate between the three and begin to understand why each loan could be an attractive option for consumers.

• Learning Objectives

  
  

  Students will be able to:

  • Conduct and synthesize research to explore 3 common types of unsecured loans.
  • Identify characteristics of personal loans, student loans, and unsecured credit cards.
  • Distinguish between personal loans, student loans, and unsecured credit cards.
  • Explain how creditworthiness affects consumers’ ability to obtain each loan.
  • Consider why each loan may be an attractive option for consumers.

• Prior Knowledge

  
  

  Students should be familiar with:

  • Loans as a source of credit
  • Characteristics of secured loans
  • Explaining the concept of creditworthiness

• Guiding Questions

  
  
  • What are some differences between personal loans, student loans, and unsecured credit cards?
  • What are some similarities between personal loans, student loans, and unsecured credit cards?
  • Why might a consumer prefer an unsecured loan?
  • How does collateral influence the requirements of obtaining an unsecured loan?
  • How does creditworthiness affect a consumer’s ability to obtain different unsecured loans?

• Procedure

  
  

  1. To introduce the lesson, have students brainstorm their prior knowledge of loans. The teacher can ask, “What do you already know about personal loans, student loans, and unsecured credit cards?”.

  • Allow students time to think individually, then in pairs, and as a whole class. Consider using chart paper to keep track of students’ prior knowledge of loans.
  • Use student responses as a segue into the activity. Explain to students that there are many different types of unsecured loans and, personal loans, student loans, and unsecured credit cards are common types of unsecured loans. Today, they will explore, compare, and discuss these three types of unsecured loans in more detail.

  2. Pass out a Comparing Unsecured Loans handout (see attachment) to each student. Students should work individually or in pairs to complete the handout.

  • Students can use the course text and/or digital resources to complete their research on each type of unsecured loan. Teachers may choose to provide a list of approved websites for students to focus their research.
  • While students are working, the teacher can visit each pair to answer any questions, check student progress, and check the accuracy of information.
  • Allow students to share information with another group to consolidate information.

  3. Bring the class together to discuss the information they found.

  • The teacher can use the guiding questions to facilitate discussion during this time.

  4. To bring the lesson to a close, have students reflect on these types of unsecured loans by completing a journal prompt. The teacher can assign specific journal prompts or let students choose from the prompts below.

  • Journal Prompt 1: Create a scenario in which a consumer might choose to take out one of these loans versus paying with cash. Explain your reasoning.
  • Journal Prompt 2: Based on your findings, would you recommend someone apply for any of these loans or suggest they pay with cash? Explain your reasoning.
  • Journal Prompt 3: Rank the three types of unsecured loans from “most appealing” to “least appealing”. Explain your reasoning for each ranking.
  • Journal Prompt 4: Explain how a consumer’s creditworthiness is useful for financial institutions lending funds to a consumer and consumers obtaining an unsecured loan.

• Teacher Notes

  
  
  • This lesson can be implemented as part 3 of a series focused on consumer credit. The 1st lesson, Unsecured and Secured Loans can be taught and used to address the prior knowledge requirements of this lesson. The 2nd lesson, Comparing Secured Loans can be taught and used for students to have background knowledge of secured loans and be able to compare specific types of secured and unsecured loans.
  • The lesson could also be implemented using a Jigsaw approach. Students could work in at least three different small groups; each group would be assigned a specific type of unsecured loan (personal, student, and unsecured credit cards). Once groups complete their research on the assigned type of loan, groups can share their information with each other so that all groups have a completed handout after sharing.
  • The attachment Comparing Secured Loans V2 can be used for students who may need additional room to take notes on the handout. The attachment could also be used if the lesson is implemented as a Jigsaw activity.

• Optional

  
  

  Formative Assessment Ideas:

  • Students’ responses to the journal prompt(s) can be used to assess their understanding of personal loans, student loans, and unsecured credit cards.

  Extension Ideas:

  • Students can use the website of a financial institution to gather real-time data on requirements for each type of unsecured loan.